City rejected bid to keep HPA in charge

Harrisburg Mayor Stephen R. Reed and the union leader for Harrisburg Parking Authority employees sounded worlds apart Friday, even as the union leader said the strife could have been avoided.

Reed said the union is open to talking about his proposal to lease city parking garages for $215 million. In fact, Reed said, a meeting was scheduled the week of May 9 between the proposed parking-garage operator and the union.

Not so, said union leader Gail Lewis.

"We're not talking to anybody," Lewis said. "Our members told us they didn't want us to."

The deal would yield a windfall that could reduce debt, put more cops on the street and lower property taxes, according to Reed. It also would result in equal or better economic conditions for parking workers, the mayor has said. But the union opposes turning over daily operations to a private entity, as the contract between the city and Harrisburg Public Parking envisions. That's even though the city has publicized a letter of recommendation for the proposed parking operator from a similar union in Chicago.

Lewis said the argument could have been avoided if the deal had been structured differently.

The union originally would have considered a lease deal in which parking revenues went to a financier but operations were still managed by the Harrisburg Parking Authority, she said.

The city did get such an offer - but it came in lower than the city wanted.

The offer came from the investment bank Morgan Stanley, which proposed a lease worth $147 million, according to a summary of bids that the Business Journal obtained Friday. The figure was well below the $215 million offer made by Harrisburg Public Parking.

"Morgan Stanley offered values ranging from $131-$150 million based on terms very similar to what the City and HPA had offered," consultants wrote in a November 2007 summary of the bids. "However, the low value does not meet the City and HPA threshold requirements."

Those requirements were to have enough money to pay off debt, replace the income stream that would be lost from the garages and have some cash left over.

There were only three bidders. The third bidder, identified in the document as Capital Source, also would have let the Harrisburg Parking Authority operate the garages. But Capital Source proposed an entirely different structure for the deal, and the consultants said the company's financing proposal was dubious.

The document refers to what is clearly the Harrisburg Public Parking proposal as coming from an entity identified as "White Acres." That proposal was rated "medium-high" on "deliverability." The Morgan Stanley proposal was rated high.

The consultants recommended the city pick the "White Acres" proposal.

Reed could not be reached late Friday afternoon to discuss the bid summary, which the Business Journal obtained after an earlier interview with the mayor.